New Trader trying to Stop Going In-Play

The sport of kings.
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ruthlessimon
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JollyGreen wrote:
Wed Mar 13, 2019 1:31 pm
never let it get 5 ticks away from you.
Euler wrote:
Wed Jul 05, 2017 10:32 am
Noise is a minimum of 5 ticks. If you use that as your stop you will get thrown out by just the noise in the market.
Out of interest, how would you reply to Euler?

Big deviation from two heavyweights. A synergy could be incredibly insightful to a lot of people
eightbo
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stueytrader wrote:
Tue Apr 09, 2019 2:15 pm
JollyGreen wrote:
Wed Mar 13, 2019 3:31 pm

Another reply on this subject. You are correct in that there is a fair bit of intuitive behaviour but you need to be aware of why a move is happening. As I said, experience plays a part and I cannot give that to new or novice traders. A lot lose money because their entry point is wrong for most of their activity. They see a move and jump on it without asking why it moved. If they waited and checked why it moved they may prevent themselves from creating an instant loss and then chasing their tails. They may actually spot the true reason (or the wrong reason) and then take advantage of it. They may catch the ongoing drift/steam based on a proper move or they may catch a reversion due to a false move.
Interesting post, which I really wanted to reply to, due to an earlier discussion I had on here.

I remember a similar discussion about the 'why' in market moves, many posters suggested that market moves were often impossible to know a 'why' behind market moves - are we now suggesting that is wrong?

Personally, I agree with the principle that all traders should have an underlying view for why a market drifts or shortens a selection, but I guess we may be discussing fundamentals vs technical analysis here - do we mean a 'fundamental' why or a technical (it's all in the stats) why?
Definitely interesting. Here's my view:

As traders we're intending to place bets that have a probability of making us money over a period of time. That means you need to have some foundation of logical reasoning behind any bets you place. Because however in any one particular case the market can produce a very wildly deviating result from any expectancy you have on the trade -- someone can decide to violently push the price in your favour or against your favour randomly. As such the 'real' why for any one particular market can not be known nor should carry too much weight.

If we can identify a concept or idea behind why the market may have moved such as where price broke below 2.0 for the first time, matched heavy volume between 1.99-1.90 before ultimately failing, returning back above 2 then violently carrying on drifting to the upside: We can have the idea that trader's who tried to take the breakout are trapped holding back positions at decent size. Regardless of whether the drift happens or not after price returns back above 2.00, because of the random element, never can we definitively say that we were "right" or "wrong" on our judgment on that particular market. It's about approaching things from a probabilistic mindset and accepting that your view may have be wrong and you may have taken a profit and similarly your view may have been correct and taken a loss.

If we make a habit of considering why the market is moving that allows our brain to begin to identify patterns between all the times you've had similar ideas which can equip the trader with a justification to pull the trigger the next time they get that feeling that the market's about to turn (discretionary/fundamental); particularly in places where they don't have stats to know that type of trade has worked out for them in the past (technical).
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JollyGreen
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We are talking about slightly different things so the 5 tick rule is pertinent to both arguments. I am trying to help the OP stop going in play so a sensible cut off is 5 ticks, I am not trying to make him cut out of a trade at 5 ticks for any other reason. If he can build discipline into his trading and stop going in play then he can start looking at issues with noise and when he can hold a position. For now, if I was to start talking about noise and holding a position based on it I feel it would simply compound his problems.
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JollyGreen
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Definitely interesting. Here's my view:

As traders we're intending to place bets that have a probability of making us money over a period of time. That means you need to have some foundation of logical reasoning behind any bets you place. Because however in any one particular case the market can produce a very wildly deviating result from any expectancy you have on the trade -- someone can decide to violently push the price in your favour or against your favour randomly. As such the 'real' why for any one particular market can not be known nor should carry too much weight.

If we can identify a concept or idea behind why the market may have moved such as where price broke below 2.0 for the first time, matched heavy volume between 1.99-1.90 before ultimately failing, returning back above 2 then violently carrying on drifting to the upside: We can have the idea that trader's who tried to take the breakout are trapped holding back positions at decent size. Regardless of whether the drift happens or not after price returns back above 2.00, because of the random element, never can we definitively say that we were "right" or "wrong" on our judgment on that particular market. It's about approaching things from a probabilistic mindset and accepting that your view may have be wrong and you may have taken a profit and similarly your view may have been correct and taken a loss.





You can play things on a pure stats basis and the move below 2.0 and then reverse back above is always a talking point. I take a simplistic view of this matter. If I can see a move below 2.0 is likely I will play that move and be wary of a potential reversal. I never look at it and think it is dangerous and the stats say it is not profitable, I will only play what I see. My experience and knowledge of the markets mean I know where the reverse is likely to occur so I will be eagle-eyed on how the money trades around that point and will be ready to jump ship. I often queue my exit orders around the likely reversal point and will try to determine if I should let them trade or perhaps cancel them if it looks like a strong move. Yes, I do get it wrong at times but I know what I am looking for and know long term I will profit. Sometimes the move smashes my orders and moves through much lower in price....that's all part of trading and I don't get upset by it.
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ruthlessimon
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JollyGreen wrote:
Tue Apr 16, 2019 4:09 pm
the stats say it is not profitable

I know what I am looking for and know long term I will profit
Doesn't this discount the use of proving "why"?

The way I've read this (& correct me if I'm wrong) so long as it's profitable; that's all that matters (& the why is labelled as "experience"). I do find that uncomfortable though :)

I take the line that a strategy must be proven in data 1st; then discretion can be overlaid & compared to the "baseline" - but this avenue is extremely limited - because hardly anything gets through the 1st stage (proven in data)
spreadbetting
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ruthlessimon wrote:
Tue Apr 16, 2019 5:31 pm
JollyGreen wrote:
Tue Apr 16, 2019 4:09 pm
the stats say it is not profitable

I know what I am looking for and know long term I will profit
Doesn't this discount the use of proving "why"?

The way I've read this (& correct me if I'm wrong) so long as it's profitable; that's all that matters (& the why is labelled as "experience"). I do find that uncomfortable though :)

I take the line that a strategy must be proven in data 1st; then discretion can be overlaid & compared to the "baseline" - but this avenue is extremely limited - because hardly anything gets through the 1st stage (proven in data)
The problem is your strategies are probably taking a very simplistic view and not taking in even half the data available to a manual trader who would be looking at the market as a whole rather than what one runner is doing. Your stats may well say it's not profitable but those stats are made up of lots of individual wins/losses that can always be drilled down further.
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ruthlessimon
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spreadbetting wrote:
Tue Apr 16, 2019 6:19 pm
The problem is your strategies are probably taking a very simplistic view and not taking in even half the data available to a manual trader who would be looking at the market as a whole rather than what one runner is doing. Your stats may well say it's not profitable but those stats are made up of lots of individual wins/losses that can always be drilled down further.
I do agree with this; & that is what I'm doing everyday - trying my best to drill down into certain trades - sucking out new objective ideas/improvements.

Maybe I've looked at it too simplistically; but for me, utlising the market as a whole (or in parts) (although this is a vague term), currently causes me to underperform
spreadbetting
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Maybe you're simply being too rigid thinking you can backfit a trading strategy from your stats.

I'm happy to take a simplistic approach to botting but that's because I'm looking at a long term view over a large number of markets with a value based approach. With trading there are far too many variables that manually you'll register but coding them in would probably make things far too restrictive. Approaching the markets looking at previous price moves or ticks is always going to be fraught with errors simply because there could be hundreds of reasons a horse moves 5 ticks maybe a fat finger, big punter, horse bolting on course even a tightening up of a loose book % could cause a move of a few ticks on certain runners. All of these things you'd register watching the market and file away in your brain but they just wont be there in the bare data you've collected or if you have it's unlikely you'd be filtering or accounting for them all.
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ruthlessimon
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spreadbetting wrote:
Tue Apr 16, 2019 8:03 pm
With trading there are far too many variables that manually you'll register but coding them in would probably make things far too restrictive.
I had you down as a quant guru; not a defender of instinctual manual trading!! :)
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Thebest147
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Move your betting bank too a exchange with no in play liquidity ie MacthBook or smarkets you will never or hardly ever get matched problem solved
trader44
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:D
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